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Reports of CDM/JI Feasibility Studies: FY2011

Title of Feasibility Study (FS)CDM FS for Energy Efficiency Project through Installing High Efficiency Air Conditioners in Viet Nam, with New CDM Methodology Development
FYrFY 2011
Main Implementing EntityMitsubishi UFJ Morgan Stanley Securities Co., Ltd.
FS Partner(s)MOIT: Ministry of Industry and Trade
ECC: Energy Conservation Center
IE: Institute of Energy
Location of Project ActivityViet Nam
Category of Project ActivityEnergy Efficiency Improvement
Targeted GHGCarbon Dioxide (CO2)
CDM/JICDM
Report
Description of Project ActivityThe purpose of the project is for the participating organizations, led by the Vietnamese Ministry of Industry and Trade (MOIT), to popularize and promote the use nationwide in Viet Nam of household inverter air conditioners featuring high-efficiency heat pump technology by taking advantage of subsidies, in an attempt to achieve greenhouse gas emission reductions.

By replacing conventional non-inverter air conditioners through phased-in introduction of state-of-the-art high efficiency air conditioners of Japan, the Project is expected to reduce GHG emissions by 121,853tCO2 on annual average.

Additionally, the Project contributes not only to GHG emissions reduction, but also to the reduction of NOx, SOx and dust from power plants connected to the grid. In the Study, the Project aims to develop a CDM methodology applicable to the Project and bring the Project into implementation by April 2013.
Methodology to be appliedMethodology for introduction of energy efficient air conditioners to households (New Methodology)
Baseline ScenarioThe baseline scenario is determined by using an investment analysis of the air conditioner market to be conducted in the project area. This relates to an approach whereby, prior to the start of the Project, appliances that are prevalent in the market are studied and the model that is found by an investment analysis to be the most financially/economically attractive is identified as a baseline model.
Monitoring PlanMonitoring is performed once a year through a Project sampling group (PSG) survey where required data, such as the amount of electricity consumed by each inverter air conditioner installed under the project activity are collected.
Estimation of GHG Emission Reductions121,853tCO2/year (annual average)
Duration of Project Activity/ Crediting Period2013~2027/2014~2028 (renewable)
Environmental Impact AnalysisBy introducing inverter air conditioners that consume less energy than conventionally popular models, the Project is designed to reduce electricity consumption in households in which those air conditioners are installed. This will contribute to reducing the amount of fuel used in power plants connected to the electricity grid and contribute to developing an environmentally sustainable society in which there are less greenhouse gases generated from fossil fuel combustion.
Demonstration of Additionality3.5 years is set as a benchmark, which represents the average number of investment payback years (difference in initial purchase price / electricity tariff reduction realized by energy saving) that prompts decision-making at the time of purchasing an energy efficient home appliance, a figure obtained from a market survey that we independently conducted in three major cities. As a result of calculating the number of investment payback years on the basis of 2011 data, the number of investment payback years in the absence of subsidies would be 12 years, which is higher than the benchmark figure, providing a clear indication that there is no incentive to purchase an inverter air conditioner on business-as-usual basis.
Project FeasibilityAs a result of consultation with related local organizations during the local survey, it has been found that there are great needs for the Project and budgetary steps are being discussed within the government for when the methodology is successfully approved. As, however, the government's budget is tight, it would be essential to secure revenues by means of CER, and for that reason, early approval of the methodology is hoped for. In order to be able to immediately bring the Project to an implementation stage taking into account further discussion required for the possibility of revision of the methodology, consultations with related local organizations have been started to discuss a project implementation plan.
"Co-benefits" (i.e. Improvement of Local Environmental Problems)The Project is designed to reduce electricity demand by introducing energy efficient appliances in private households and thus contribute indirectly to reducing air pollutants emitted from the use of fossil fuels at power plants that are connected to the electricity grid from which those households receive their electricity supply.
Contribution to Sustainable Development in Host CountryThe Project will lead to economic growth based on a stable energy supply in Viet Nam, the reduction of air pollutants generated from fossil fuel combustion in power plants through proper adjustment to energy demand, and furthermore to the mitigation of climate change, thus contributing greatly to Viet Nam's sustainable development goal set out in its "Comprehensive Poverty Reduction and Growth Strategy," "National Strategy for Environmental Protection," etc

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